Israel-based Teva Pharmaceutical Industries (Nasdaq: TEVA), the world’s biggest generic drugmaker, will benefit from winning a large proportion of Germany's largest health insurance tenders with the country keen to promote the use of generic drugs as it battles soaring drug spending, according to an analysis by Corporate Financing Week (CFW).
Therefore, while the sales of innovative drugs may experience a decline in Germany as a result of the patent cliff and the consequent rise in generic competition, CFW believes the high consumption of generic medicines by volume (75% in 2009) suggests opportunities for generic drugmakers in Europe's largest drug market.
However, CFW notes that downward pressure on the prices of generic medicines as a result of tenders raising the level of competition and the ultimate commoditization of off-patent medicines, draws attention to the inherent challenges for generic drugmakers looking to profit from the government's focus on cost-containment within the healthcare sector. This is particularly evident in the poor performance of Dr Reddy's Betapharm in Germany, it says.
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